Dirtier Trains and Less Newsprint: the Energy Crisis Fallout

  • In Business
  • 2021-10-17 04:00:00Z
  • By Bloomberg

(Bloomberg) --

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Europe's deepening energy crisis is sending severe -- and some surprising -- ripples across everything from transporting goods by train to glasshouses growing vegetables.

Headlines have focused on governments trying to tackle soaring gas and power prices rocking energy retailers and crucial carbon-dioxide supplies. But there's a growing list of other far-reaching impacts, such as threats to the paper that news is printed on, production cuts for metals and rising building costs.

The energy squeeze is hitting China and India too, causing blackouts and prompting moves to secure extra coal to get households through winter. And industries and governments are resorting to more polluting means to keep economies running.

Here's how surging energy costs are hitting industries:

Ditching Electric Trains

With an electric fleet becoming too expensive, U.K. freight operator Freightliner is turning back to diesel-operated trains to transport vital goods. It's among the latest examples of how industries are switching fuels to keep costs down.

Less Paper

Britain's top maker of newsprint, Palm Paper Ltd., is considering cutting output this winter after it didn't adequately hedge its purchases of gas, which make up a large chunk of its costs. Swedish paper mill Klippans Bruk AB is also feeling the pinch, reducing operations and cutting almost a third of its workers.

Food Worries

Warnings are mounting about longer-term fertilizer-plant shutdowns because of costly gas, adding to future grain-supply worries. That's as high heating costs force greenhouses in the Netherlands, a food-export giant, to go dark, threatening to cut tomato, cucumber and flower supplies. It's a similar story in the U.K.

The Rust-Proofing Metal

The metals world is getting desperate. Zinc giants Nyrstar and Glencore Plc last week said they're cutting production at European smelters -- in some places by up to 50% -- because of rising costs. That's tightening supply of the metal used for rust-proofing, and pushing an index of metals prices to a record high.

In steel, top European producer ArcelorMittal is among those halting operations. While the supply impact isn't yet severe, the most-affected products will be those used in construction and which are typically made in greener electric-arc furnaces, rather than coal-fired ones.

DIY Misery

Home improvement may get more expensive. French construction materials maker Saint-Gobain warned it'll offset record energy costs by charging more for products like plaster, roofing and insulation materials. The head of British Glass said a quarter of the 6,000 jobs in his industry are under threat.

Silicon Squeeze

High energy costs have led China to cut output of silicon, one of the most abundant elements. That's seen prices spike and manufacturers including Norway's Elkem ASA suspend sales of silicone-based products, a headache for sectors using the material in everything from car parts to computer chips.

Chemicals Dilemma

Chemical companies including BASF SE, Europe's biggest, have reduced ammonia production. As well as being a foundation of nitrogen fertilizers, ammonia is relied on in industries such as automotives, textiles, healthcare and cosmetics. Consultant CRU last month said about half of the continent's ammonia capacity is at risk of shuttering or curtailing output, or already closed.

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©2021 Bloomberg L.P.


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